The increasing demand for rare earth metal palladium in automotive and industrial use amid supply constraints pushed palladium to its all-time price high of $2909.30 per ounce on April 26. A decreasing gold-palladium ratio over the past few weeks signifies that palladium is trading better than gold.

Prices of palladium have risen  by more than 23% since Russia’s Nornickel, the world’s largest producer of palladium and high-grade nickel, partly suspended operations at two of its mines on February 24. Also, the rising interest in and policy support for the production of fuel-efficient and low emission cars is expected to drive demand for palladium even more in the future.

Given this backdrop, we think Aberdeen Standard Physical Palladium Shares ETF (PALL) and Sprott Physical Platinum and Palladium Trust (SPPP) are well positioned to deliver solid returns.

Aberdeen Standard Physical Palladium Shares ETF (PALL)

PALL seeks to reflect the performance of the price of palladium. The fund is designed for investors who want a cost-effective and convenient way to invest in palladium with minimal credit risk. PALL has $477.50 million in assets under management (AUM).

PALL has a 0.60%  expense ratio, which is higher than the 0.49% category average. The ETF has gained 42.6% over the past year and 30.6% over the past nine months. The ETF’s net inflows have totaled  $32.24 million over the past month.

PALL’s POWR Ratings reflect this promising outlook. The ETF has an overall A grade, which equates to Strong Buy rating in our proprietary ratings system. PALL also has an A for Trade Grade, Buy & Hold Grade and Peer Grade. Among  36 ETFs in the Precious Metals ETFs group, PALL is ranked #3.

Sprott Physical Platinum and Palladium Trust (SPPP)

SPPP is a closed-end trust that invests and holds substantially all its assets in Good Delivery physical platinum and palladium bullion. The fund intends to invest in long-term holdings of unencumbered, fully allocated, physical platinum and palladium bullion and will not speculate regarding short-term changes in platinum and palladium prices. The fund has approximately $164.77 million AUM.

SPPP has a 0.50%  expense ratio of 0.50%, which is higher than the 0.49% category average. The fund has gained 50.3% over the past year and 29.3% over the past nine months. The fund’s net inflow has amounted to $80.62 million over the past month.

SPPP’s strong fundamentals are reflected in its POWR Ratings. The fund has an overall A grade, which equates to Strong Buy rating in our proprietary ratings system. SPPP also has an A for Trade Grade, Buy & Hold Grade, and Peer Grade. It is ranked #4 in the same group.

PALL shares were unchanged in after-hours trading Tuesday. Year-to-date, PALL has gained 20.15%, versus a 12.04% rise in the benchmark S&P 500 index during the same period.

About the Author: Sweta Vijayan

Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market. More...

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